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IFRS 15 IFRS 15 Revenue from Contracts with Customers Is Issued

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IFRS 15 IFRS 15 Revenue from Contracts with Customers Is Issued IFRS 15 IFRS 15 Revenue from Contracts with Customers is issued by the International Accounting Standards Board (the Board). IFRS Standards together with their accompanying documents are issued by the International Accounting Standards Board (the “Board”). Disclaimer: To the extent permitted by applicable law, the Board and the IFRS Foundation (Foundation) expressly disclaim all liability howsoever arising from this publication or any translation thereof whether in contract, tort or otherwise (including, but not limited to, liability for any negligent act or omission) to any person in respect of any claims or losses of any nature including direct, indirect, incidental or consequential loss, punitive damages, penalties or costs. Information contained in this publication does not constitute advice and should not be substituted for the services of an appropriately qualified professional. Copyright © IFRS Foundation All rights reserved. Reproduction and use rights are strictly limited. Contact the Foundation for further details at [email protected]. Copies of IASB publications may be obtained from the Foundation’s Publications Department. Please address publication and copyright matters to: IFRS Foundation Publications Department 30 Cannon Street, London, EC4M 6XH, United Kingdom. Tel: +44 (0)20 7332 2730 Fax: +44 (0)20 7332 2749 Email: [email protected] Web: www.ifrs.org The IFRS Foundation logo, the IASB logo, the IFRS for SMEs logo, the “Hexagon Device”, “IFRS Foundation”, “eIFRS”, “IAS”, “IASB”, “IFRS for SMEs”, “IASs”, “IFRS”, “IFRSs”, “International Accounting Standards” and “International Financial Reporting Standards”, “IFRIC” and “IFRS Taxonomy” are Trade Marks of the IFRS Foundation. © IFRS Foundation 1 IFRS 15 Approval by the Board of IFRS 15 Revenue from Contracts with Customers issued in May 2014 IFRS 15 Revenue from Contracts with Customers was approved for issue by all sixteen members of the International Accounting Standards Board.1 Hans Hoogervorst Chairman Ian Mackintosh Vice-Chairman Stephen Cooper Philippe Danjou Martin Edelmann Jan Engström Patrick Finnegan Gary Kaburek Suzanne Lloyd Amaro Luiz de Oliveira Gomes Patricia McConnell Takatsugu Ochi Darrel Scott Chungwoo Suh Mary Tokar Wei-Guo Zhang 1 Prabhakar Kalavacherla was a member of the IASB when it voted in November 2013 to begin the balloting process for IFRS 15. However, IFRS 15 was finalised and ready for approval by members of the IASB only after Mr Kalavacherla had retired from the IASB at the completion of his term on 31 December 2013. 2 © IFRS Foundation IFRS 15 Approval by the Board of Effective Date of IFRS 15 issued in September 2015 Effective Date of IFRS 15 was approved for publication by the fourteen members of the International Accounting Standards Board. Hans Hoogervorst Chairman Ian Mackintosh Vice-Chairman Stephen Cooper Philippe Danjou Amaro Luiz De Oliveira Gomes Martin Edelmann Patrick Finnegan Gary Kabureck Suzanne Lloyd Takatsugu Ochi Darrel Scott Chungwoo Suh Mary Tokar Wei-Guo Zhang © IFRS Foundation 3 IFRS 15 Approval by the Board of Clarifications to IFRS 15 Revenue from Contracts with Customers issued in April 2016 Clarifications to IFRS 15 Revenue from Contracts with Customers was approved for issue by thirteen of the fourteen members of the International Accounting Standards Board. Mr Ochi dissented. His dissenting opinion is set out after the Basis for Conclusions. Hans Hoogervorst Chairman Ian Mackintosh Vice-Chairman Stephen Cooper Philippe Danjou Martin Edelmann Patrick Finnegan Amaro Gomes Gary Kabureck Suzanne Lloyd Takatsugu Ochi Darrel Scott Chungwoo Suh Mary Tokar Wei-Guo Zhang 4 © IFRS Foundation IFRS 15 BC CONTENTS from paragraph Basis for Conclusions on IFRS 15 Revenue from Contracts with Customers INTRODUCTION BC1 OVERVIEW BC2 BACKGROUND BC4 Why make the change? BC14 Alternative revenue recognition models BC16 Clarifications to IFRS 15 (Amendments issued in April 2016) BC27A SCOPE BC28 Definition of a contract BC31 Accounting for contracts that do not meet the criteria in paragraph 9 BC47 Wholly unperformed contracts BC50 Definition of a customer BC52 Exchanges of products to facilitate a sale to another party BC58 Contracts with customers outside the scope of the requirements BC60 Contracts partially within the scope of other Standards BC64 IDENTIFYING THE CONTRACT BC67 Applying IFRS 15 at a portfolio level BC69 Combination of contracts BC71 Contract modifications BC76 IDENTIFYING PERFORMANCE OBLIGATIONS BC84 Definition of a performance obligation BC84 Identifying the promised goods or services BC87 Identifying when promises represent performance obligations BC94 A series of distinct goods or services that are substantially the same and have the same pattern of transfer BC113 Clarifications to IFRS 15 (Amendments issued in April 2016) BC116A SATISFACTION OF PERFORMANCE OBLIGATIONS BC117 Control BC118 Performance obligations satisfied over time BC124 Performance obligations satisfied at a point in time BC153 Measuring progress towards complete satisfaction of a performance obligation BC158 MEASUREMENT OF REVENUE BC181 Determining the transaction price BC184 Variable consideration BC189 The existence of a significant financing component in the contract BC229 Non-cash consideration BC248 Consideration payable to a customer BC255 Customer credit risk BC259 © IFRS Foundation 5 IFRS 15 BC ALLOCATING THE TRANSACTION PRICE TO PERFORMANCE OBLIGATIONS BC266 Estimating stand-alone selling prices BC268 Allocating discounts and variable consideration BC277 Changes in transaction price BC286 Contingent revenue cap and the portfolio approach to allocation BC287 ONEROUS PERFORMANCE OBLIGATIONS BC294 CONTRACT COSTS BC297 Incremental costs of obtaining a contract BC297 Costs to fulfil a contract BC304 Amortisation and impairment BC309 Learning curve BC312 PRESENTATION BC317 Relationship between contract assets and receivables BC322 DISCLOSURE BC327 Disclosure objective and materiality BC330 Contracts with customers BC332 Performance obligations BC354 Significant judgements BC355 Assets recognised from the costs to obtain or fulfil a contract with a customer BC356 Disclosures required for interim financial reports BC358 APPLICATION GUIDANCE BC362 Sale with a right of return BC363 Warranties BC368 Principal versus agent considerations BC379 Customer options for additional goods or services BC386 Customers’ unexercised rights (breakage) BC396 Licensing BC402 Repurchase agreements BC422 TRANSITION, EFFECTIVE DATE AND EARLY APPLICATION BC434 Transition BC434 Effective date and early application BC446 ANALYSIS OF THE EFFECTS OF IFRS 15 BC454 Overview BC456 Reporting revenue from contracts with customers in the financial statements BC460 Improved comparability of financial information and better economic decision- making BC481 Compliance costs for preparers BC486 Costs of analysis for users of financial statements BC489 Conclusion BC491 CONSEQUENTIAL AMENDMENTS BC494 Sales of assets that are not an output of an entity’s ordinary activities BC494 6 © IFRS Foundation IFRS 15 BC TRANSITION FOR FIRST-TIME ADOPTERS OF IFRS BC504 SUMMARY OF MAIN CHANGES FROM THE 2011 EXPOSURE DRAFT BC510 APPENDICES A Comparison of IFRS 15 and Topic 606 B Amendments to the Basis for Conclusions on other Standards © IFRS Foundation 7 IFRS 15 BC Basis for Conclusions on IFRS 15 Revenue from Contracts with Customers This Basis for Conclusions accompanies, but is not part of, IFRS 15. Introduction BC1 This Basis for Conclusions summarises the joint considerations of the International Accounting Standards Board (IASB) and the US national standard-setter, the Financial Accounting Standards Board (FASB), in reaching the conclusions in their standards, IFRS 15 Revenue from Contracts with Customers and Topic 606, which is introduced into the FASB Accounting Standards Codification® by the Accounting Standards Update 2014-09 Revenue from Contracts with Customers. It includes the reasons for accepting particular views and rejecting others. Individual Board members gave greater weight to some factors than to others. BC1A In April 2016, the IASB issued Clarifications to IFRS 15 Revenue from Contracts with Customers. The objective of these amendments is to clarify the IASB’s intentions when developing the requirements in IFRS 15 but not to change the underlying principles of IFRS 15. Further details are contained in paragraphs BC27A–BC27H. In some cases, the boards made the same amendments to IFRS 15 and Topic 606. In other cases, the boards did not make the same amendments to the standards. The FASB also amended Topic 606 for issues for which the IASB concluded that it was not necessary to amend IFRS 15. The IASB added a further practical expedient to the transition requirements, which the FASB decided not to provide. Accordingly, Appendix A Comparison of IFRS 15 and Topic 606 to this Basis for Conclusions has been updated to reflect the differences between the amendments to IFRS 15 and the amendments to Topic 606. Overview BC2 IFRS 15 and Topic 606 are the result of the IASB’s and the FASB’s joint project to improve the financial reporting of revenue under International Financial Reporting Standards (IFRS) and US Generally Accepted Accounting Principles (US GAAP). The boards undertook this project because their requirements for revenue needed improvement for the following reasons: (a) US GAAP comprised broad revenue recognition concepts and detailed guidance for particular industries or transactions, which often resulted in different accounting for economically
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